Exhibit 10.20


 


WOOD CHIP PURCHASING AGREEMENT


 


THIS WOOD CHIP PURCHASING AGREEMENT (the
“Agreement”) dated this 10th day of April, 2002 is by and between BLUE RIDGE
PAPER PRODUCTS INC. (“BLUE RIDGE PAPER”) and LOUISANA-PACIFIC (“L-P”)


 


WITNESSETH:


 


WHEREAS, BLUE RIDGE
PAPER owns and operates a paper mill in Canton, North Carolina and wishes to
purchase wood chips from L-P.


 


WHEREAS, L-P owns
and operates a chip mill in Roaring River, North Carolina (the “L-P Mill”) and
is willing to provide wood chips to BLUE RIDGE PAPER PRODUCTS through May 19,
2004.


 


NOW, THEREFORE, in
consideration of the mutual promises contained herein, the parties agree as
follows:


 


ARTICLE I. - PURCHASE OF WOOD CHIPS


 


1.1                                 Term and Quantity.  During
the period from February 5, 2002 through May 19, 2004, BLUE RIDGE PAPER agrees
to purchase from L-P and L-P agrees to manufacture and sell to BLUE RIDGE PAPER
approximately 125,000 tons of hardwood wood chips annually on the terms and
conditions set forth in this Article and in Articles II through IV.


 


1.2                                 Delivery:


 


a)              All
Chips shall be delivered free on board rail at the L-P Mill except during
abnormal circumstances when rail service is disrupted chips may be delivered
free on board truck at the L-P Mill.


b)             Two
weeks of downtime will be scheduled each year during which time no chipping
services will be provided.  BLUE RIDGE
PAPER will make reasonable efforts to order 2,500 tons of Hardwood Chips each
week subject however to maintenance and down time at the Canton Mill.  BLUE RIDGE PAPER will confirm or modify each
week’s Chip order and schedule of delivery approximately four days before the
week in question begins.


 


1.3                                 Price and Payment:


 


a)              BLUE
RIDGE PAPER shall pay L-P weekly for Chips delivered as set forth on Schedule 1
attached hereto and incorporated herein.


 


b)             BLUE
RIDGE PAPER may deduct from payment due any overpayment, loss or adjustment due
to incorrect scaling or failure to meet specifications.


 

















 


1.4                                 Minimum Volume. Except for the two
weeks of scheduled downtime, the minimum target volume of Chips to be processed
and delivered each week is 2,500 tons. 
In the event the agreed to quarterly target volume of 31,250 tons is not
met, at the end of each quarter both parties shall meet and use their best
efforts to resolve the shortfall.  This
does not relieve BLUE RIDGE PAPER of its obligation to purchase or L-P of its
obligation to produce the estimated annual amount of 125,000 tons of chips
stated here in.


 


1.5                                 Scaling. 
All Chips delivered to BLUE RIDGE PAPER shall be weight scaled at
Canton, North Carolina.  A weekly pay
statement shall be provided to L-P within one week of delivery.


 


ARTICLE II – QUALITY


 


2.1                                 Quality. 
L-P understands that high quality Chips are essential to the high
quality paper that BLUE RIDGE PAPER intends to manufacture at the Canton
Mill.  All chips delivered must meet or
exceed the specifications set forth in Exhibit A.


 


2.2                                 Measurement.  Chip quality will be measured by L-P using a Classifier
system approved by BLUE RIDGE PAPER, after the Chips have been screened and at
a location and on a schedule to be agreed upon by BLUE RIDGE PAPER and
L-P.  The Chips shall be correlated to
the same classifier sizes as BLUE RIDGE uses at its other supplier mills.  The current screen sizes are 1 3/4”, 1”,
1/2”, 3/8”, 1/8” and PAN.


 


ARTICLE III – TERMINATION


 


3.1                                 Default. 
In the event either party defaults in the prompt or full performance
of any provision of this Agreement, the other party shall give written notice
of default and the defaulting party shall have thirty (30) days after notice to
cure the default.  If the default is not
cured to the non-defaulting party’s satisfaction, the non-defaulting party
shall have the right to terminate effective immediately.


 


3.2                                 Other Reasons for Termination.  This Agreement shall immediately terminate
upon (i) the insolvency of either party or (ii) thirty (30) days after the
filing of a claim of bankruptcy by or against a party hereto, whether voluntary
or involuntary, providing such claim has not been dismissed within the thirty (30)
day period.


 


3.3                                 Termination by Mutual Agreement.  This Agreement may be terminated upon the
mutual written agreement of both parties.


 


ARTICLE IV. – MISCELLANEOUS


 


4.1                                 Insurance.  L-P shall obtain and continue in force during the term of this
Agreement the following minimum limits of insurance.


 

















 


a)              Comprehensive
General Liability insurance of $1,000,000 CSL per occurrence for bodily injury
and property damage combined, $1,000,000 aggregate, with contractual liability
covering the liability of L-P assumed under paragraph 4.2.


 


b)             Workers Compensation
insurance (statutory amount) and Employer’s Liability of $500,000.


 


Certificates
of insurance shall be provided to BLUE RIDGE PAPER and kept current as evidence
of the above coverages and shall provide that at least thirty (30) days notice
shall be given to BLUE RIDGE PAPER at the address set forth in paragraph 4.6
before any material change or cancellation of the policy.


 


Failure by L-P
to perform the requirements of this paragraph shall be a material default.


 


4.2                                 Indemnification.  Each party assumes responsibility for and shall indemnify,
defend and hold the other party harmless from and against claims, demands,
suits, judgments, actions or liability, including fees and costs of attorneys,
arising out of (i) breach of warranty of title (ii) personal or bodily injury
to or death of any person (including, but not limited to the employees of the
indemnitor) or (iii) damage, loss or destruction of property sustained by any
person when such injury, death, damage, loss or destruction is caused by the
intentional misconduct or negligent act or omission of the indemnitor, its
employees, agents, contractors or subcontractors or when such act or omission
is the kind for which one is made strictly liable.  When such injury, death, damage, loss, or destruction is caused
by the joint or concurrent negligence of the indemnitor or those for whom the
indemnitor has assumed responsibility and the indemnitee, then the indemnitor’s
liability under this clause shall be equal to the degree that its negligence
together with the negligence of those for whom the indemnitor has assumed
responsibility contributed to the cause of the injury, death, damage, loss or
destruction, provided, however, that under these circumstances each party shall
bear its own defense costs.


 


4.3                                 Force Majeure


 


a)              Either parties’
performance of the duties set forth in this Agreement shall be excused or
reduced when the party is prevented from such performance due to events of
Force Majeure such as Acts of God, acts or omissions of public authorities
including federal, state, or local governments, fire or other casualty, labor
disputes, wars, fuel shortage and/or any other similar event beyond that
party’s control.


 


b)             In the event that
either party is prevented by an event of Force Majeure from performance of its
duties, the party seeking excuse shall promptly notify the other party of the
event which gives rise to the excuse of performance, the anticipated duration
of the interruption of performance and its extent.


 

















 


4.4                                 Independent Contractor Relationship.  The status of L-P under this Agreement is
that of an independent contractor.  The
parties in no way stand in the relationship of master and servant, principal
and agent, or employer and employee. 
Except as herein provided, L-P shall be and remain free from the
direction and control of BLUE RIDGE PAPER in all particulars in the performance
of this agreement.


 


4.5                                 Assignment, Governing Law, Entire Agreement.  This Agreement shall (a) be construed under the
laws of the State of North Carolina; (b) may be assigned by BLUE RIDGE PAPER
upon written notice to L-P; and  (c) may
not be modified except by a writing signed by both parties.  All prior or contemporaneous agreements
regarding the subject matter of this Agreement among the parities, whether
written or oral, are merged herein and shall be of no force or effect.  There are no representations or warranties
related to the subject matter hereof other than those set forth in this
Agreement.


 


4.6                                 Notices.  All notices or other communications which are required or
permitted hereunder shall be sufficient if delivered personally or by
registered or certified mail, postage prepaid as follows:


 


	
  If to BLUE RIDGE PAPER:

  	
   

  	
  BLUE RIDGE PAPER PRODUCTS INC.

  
	
   

  	
   

  	
  Chip Procurement

  
	
   

  	
   

  	
  P.O. Box 4000

  
	
   

  	
   

  	
  Canton, North Carolina 28716-35618

  
	
   

  	
   

  	
  ATTENTION:  JERRY SMATHERS

  
	
   

  	
   

  	
  (828) 646-2271

  
	
   

  	
   

  	
  (828) 646-2266 (FAX)

  
	
   

  	
   

  	
   

  
	
  If to L-P:

  	
   

  	
  LOUISANA-PACIFIC

  
	
   

  	
   

  	
  Highway 268

  
	
   

  	
   

  	
  P.O. Box 98

  
	
   

  	
   

  	
  Roaring River, NC 28669

  
	
   

  	
   

  	
  ATTENTION:  MARK WISEMAN

  
	
   

  	
   

  	
  (336) 696-3418

  
	
   

  	
   

  	
  (336) 696-3439 (FAX)

  



 


4.7                                 Limitation of Damages.  Under no circumstances shall either party be
liable to the other at any time for consequential damages, punitive damages or
the reimbursement of expenses incurred in connection with its performance under
this Agreement.


 


4.8                                 No Third Party Benefits.  This Agreement is made for the sole benefit
of BLUE RIDGE PAPER and L-P and no other person shall have any right or remedy
or other legal interest of any kind under or by reason of this Agreement.


 


4.9                                 Waiver.  No waiver of any of the terms and conditions of this Agreement
shall be considered or construed to be a continuing waiver.  Failure to enforce any provision of this
Agreement shall not operate as a waiver of such provision or any other provision.


 

















 


4.10                           Construction.  All provisions for this Agreement have been negotiated at arm’s
length and this Agreement shall not be construed for or against any party by
reason of the authorship or alleged authorship of any provision hereof.


 


4.11                           Sustainable Forestry Initiative.  Upon execution of this agreement, L-P is
acknowledging that L-P wood procurement personnel and such subcontractors as
deemed necessary to fulfill this agreement, shall be trained in appropriate SFI
State Implementation Committee approved training and will encourage suppliers
to adhere to all Forestry Best Management Practices (BMP’s) in the states where
they perform the activities of this agreement. 
L-P hereby acknowledges that it has achieved SFI third party
certification and has an ongoing SFI program meeting AF&PA standards.  Documentation is maintained and available
for inspection.


 


 


	
   

  	
  BLUE RIDGE
  PAPER PRODUCTS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry C.
  Smathers

  	
   

  
	
   

  	
   

  	
  Jerry C.
  Smathers

  
	
   

  	
   

  	
  JoAnn
  Messer, C.P.M

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LOUISANA-PACIFIC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark S.
  Wiseman

  	
   

  



 

















 


SCHEDULE 1


 


Intention


The intention
of this schedule is to provide a mechanism for adjusting price quarterly if
roundwood costs fluctuates up or down. 
Annually, a baseline for roundwood and processing cost as well as a roundwood
cost range is determined.  Any quarterly
price adjustment will be plus or minus the change in roundwood cost as long as
it is within the roundwood cost range established.


 


Base Line for Processing                                  $7.00
per chip ton


(Price does not change)


 


Base
Line Roundwood Cost in Chip Tons


•                       Hardwood                  $27.00/Ton
of Delivered Chips


 


Movement
From The Base Line Cost Within A Year


•                       Hardwood                  $
26.50/Ton - $27.50/Ton


 


Cost
Review – Quarterly


•                       During a
quarterly review, the parties shall review the rates paid under this Agreement,
and if market conditions have changed, may renegotiate the rate for the
upcoming quarter within the stated annual brackets.


•                       The parties
intend that the rate to be paid for each Product shall be no greater than fair
market value for the designated Product for similar contract term, volume,
quality and species.


 


Cost
Review – Annually


•                       The base
rate and cost limits will be reviewed and agreed to, every year before December
1st for each year of this contract.


 


Unable
to Agree


•                       In the
event Seller and Blue Ridge Paper’s representative are unable to agree upon the
rate for the upcoming quarter or year, Seller shall be entitled to meet with
the appropriate Blue Ridge Paper’s Management Team to discuss and attempt to
resolve such rate.


•                       Deliveries
shall continue pending the Management Team’s decision at the then-current rate,
and adjustments shall be retroactive to the beginning of the quarter or year.


•                       If
agreement still is not met, an agreed to third party arbitrator will be used to
establish the price within the quarter in question.


•                       If the
parties fail to agree upon an arbitrator, then each party may select an
arbitrator and the arbitrators so chosen shall appoint a third to act as an
umpire.  The majority opinion of the
three shall be the binding decision upon the parties.


 

















 


Exhibit H


 


BLUE RIDGE PAPER PRODUCTS INC.


 


CHIP SPECIFICATIONS

CANTON, NC MILL


 


	
   

  	
   

  	
  TARGET

  	
   

  	
  MAXIMUM

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIZE (PINE & HARDWOOD)

  	
   

  	
  3/4”

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BARK

  	
  SUMMER

  	
  LESS THAN

  	
   

  	
  1

  	
  %

  	
  1

  	
  %

  
	
   

  	
  WINTER

  	
  LESS THAN

  	
   

  	
  2

  	
  %

  	
  2

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OVERSIZE (RETAINED ON 1 3/4” SCREEN)

  	
   

  	
  1

  	
  %

  	
  3

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PINS (RETAINED ON 1/8” SCREEN)

  	
   

  	
  7

  	
  %

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FINES (PASS THROUGH 1/8” SCREEN)

  	
   

  	
  0.5

  	
  %

  	
  1

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RETAINED ON 1” SCREEN

  	
   

  	
  15

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RETAINED ON 1/2” SCREEN

  	
   

  	
  65

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RETAINED ON 3/8” SCREEN

  	
   

  	
  10

  	
  %

  	
   

  	
   

  



 


OTHER:


 


ALL CHIPS WILL BE SCREENED.
STANDARD SCREEN SIZES ARE:


TOP
SCREEN - 1 3/4” ROUND


BOTTOM
SCREEN - 3/8” ROUND


 


PINE AND HARDWOOD CHIPS WILL BE
COMPLETELY SEPARATED.


 


NO CONTAMINATION IS ALLOWED
FROM PLASTICS, SOIL, METAL, STYROFOAM, OIL, ETC.


 


“BEETLE KILLED” OR DEAD AND
STAINED WOOD WILL BE NO MORE THAN 25% OF A LOAD. ALL OTHER WOOD IS EXPECTED TO
BE “GREEN”AVERAGING BETWEEN 40 TO 50% MOISTURE CONTENT.


 


NOTE: BOTH RESIDUAL AND PRIMARY
CHIP SUPPLIERS ARE EXPECTED TO ADHERE TO THESE CHIP SIZE SPECIFICATIONS.
FAILURE TO DO SO WILL RESULT IN TERMINATION
OF DELIVERIES.


 


REVISION DATE: MARCH, 1997